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Home My WebLink About0285.094June 2t 1994 HONORABLE CITY COUNCIL Palo Alto, California Members of the council: ~ in Brief -,-: 8 This report provides information on sublease arrangements lIind rental rate structures for subtenants at the Cubberley Co~unlty Center and for the four providers of extended day care at the eleven elementary school sites. All of these leases are associated with the LeaS(l and Covenant Not to Develop with the Palo Alto Unified School District (PAUSD). This report requests that Council 1) reconfirm thu existing rental rate policy at the CUbberley site to maintain the level of revenue necessal'y to cover the "pass-through ll rent due PAUSD, and direct staff to return to Council if minor adjustments are proposed to this rate policy; 2) waive t for the existing subtenants, Policy and Procedures 1-11 1 Leased Use of city Land/Facilities, which requiros that open and cOIll.pet,itive bid processes be used to solicit proposals prior-to awa'rdinq any long-term. leasej and 3) reconfirm the existin9 rental policy for the extended day care sites. J:1J!ltbor1.§y After Council approval of the Cubberley Naster Plan on Hay 16 1 1991, and adoption of the conditional. USQ; Pormit~ staff prepared a qeneral sublease plan, which set forth delegation of authority to the city Manager to execute Cubbsrley subleases fOI: terms not to exceed five years (CMR:445:91 and CMR:490:91). Upon council's approval of the sublease and rate plan, thirty-three cubberley subleases were negotiated, executed and put into place. cm\: 285: 94 (. I L [ L [. , I !. \ .":_~~''''''''-'~'''''''''''''''~';~';''<_';~~~'S..~~~~:; , o Stl\ff's 9'081 in establishinq the s'-:Jblease rental rates was to covor the cost of the "pass throu9h" lease payment to PI\USD. The II pass thr~uqh~ lease revenue is due PAOSD, regardless of how much lease income the City actually re.alizes at CUbherley. The init-ial amount waa $1 million, which inc:reasefJ annually by the local Consumer Price Index (CPI). When the City leased the site from the DIstrict in 1990, -the annual lease payment for the site was calculated to include an .ftll.ount equal .to the income the District was then deriving from its leases at Cubberley. The District estimated it was receivinq approximately $1 million in lease r~V6nue from the aite. It was calculated on a gross rent basis, not net of utility or maintenance costs. In an effort to lllaintain this lease revenue and to provide affordable, subsidized rents for artists, nonprofit and dance tenants, statf had established the following lease rate plan: -- Type or Use Monthly Rental R.te/sq.~t./)lonth .-. Artists $.39 residents $.43 nom:."esidents ._-. __ .. _._-.. _----- Subsidized nonprofit and dance $.65 Non-subsidized rental rates $1.09 to $1. 39 -. (determined by space and type of use) Staff recommends that Council reconfirm this rental rate policy in an effort to maintain the level of revenue necessary to cover the lipass-through" rent d\l:e PAUSD. If opportunities arise to provide SUbsidies to the arts community, other than those specified in the lease rate plan, while still maintaining this level of revenue with minot" adjustments to this .'rental plan structure, staff would propose a reevaluation of the rental structure and return to council wIth recommendations for. any 'adjustments to this plan. Upon approval of the sublease rental policy, many of the Cubberley SUbleases, ex-cludinq the artists, were granted for a three-year term and are due to expire wi thin the next year. Host of the three-year terms were granted pursuant to the subtenants' requests. Staff wishes to renegotiate additional three to five-year subleases with existing subtenants who have demonstrated a respons.lble, long standing relationship with users of the site and with the City_ Hany have established successful community-based programs and are requesting additional three to five-year subleases for continued occupancy of their spaces. All of the existing subtenants have CMR:285:94 2 \ \. I .',' ') maintained reliable rental paymont histories and lIIr.liny have provided tor iuprovem.ents to their subleased spaces. Staff hopes to renegotlete with thFJSe existing subtenants 'Without having to Qolicit competitive bids, as required in Policy and Procedures i ll. The sublease rental rates will remain as originally established and 'WIll continue to be increased annually, it' accordance with tho. local Consumer Price Index (CPt). Any current vacant 'space, and' any future v~cated space, will remain subject to the soliciting of competitive bids as required by policy and P.rocodures 1-11. B.t.n~.4 Day Care Rental rAtes for the extended day caro sitos were established and approved by Council in January 1990 (CMR: 114:0). The Lease and Covenant Not to Dovelop with PAUSD provides that the District provide space for before and after-school child care programs at oleven el"O~ent9ry school sites. There are currently four providers oper.atinq eleven programs. 'l'he two l1for-profit" providers are the Children's C.l-eatlve J .. carninq Center at Nixon, and Redwood Enrichnent conter at Fairll'lcadow. The two nonprofit providers arc Palo Alto COmIllunity Child Care (PACCC) (at Addison, Duveneck l El car~Dlol Escondido, Hoover, Ohlone, Palo Verda, and Walter Hayes) I and PAUSD at the Juana Briones site. Providers for. the extended day c~re sites are selected by the City'S Child Care Coordinator in conjunction with the site's Parent Advisory Committee.. 'I'he parents at oach'ot the eleven proqrarns have the option of requesting a new provider for the following academic year if they ~re dissatisfied wit~ 'the present arrangement. The monthly rents for each site were established to range between $170 .nd $420, depend~ng upon the she of the facility, and utility costa _were to be ~illed at approximately $50 per month per site. Those rents ~ere anticipated to offset approximately 88 percent of the Oay Care Coordinator's salary and henefits, which'is funded by the utility ,users tax. The rental rates have been increased annually, accordinq to the local CPI; and the utility payments were adjusted by PAl.1SD to be paid in accordance with an averag,e cost per equllIre f4Jot per month, based upon the actual annual usage at the Juana Briones sit~ (Attachment A summarizes the current rental rates per site). These utility payments are a direct Ilpass_ through" to PAUSD. There is no differential between the rates changed to nonprofit and for~profit providers, z"nd tho Human Services Division is not recoJ'lmendinq any changes to, the cl1rrent rental rates at this time. CUrrently ~ subleases are granted for terms not to exceed twelve :months. Since two of the providers have expressed an interest in a longer tern sUblease I staff will assess the benefits of such an arrangement alld wi 11 return to Council during 1994-95 with a CHR:285:94 3 \ o recollU1and""tion. Re9ardless ot the len<}th ot tho sublo~se, staff will unsuro that parents retain tho ability to selact a new provider if they choosa to do so. Jn~irOna'Dt'l lapaot AIJ~.'.ln! The lees.s8 ot 3n eXisting tacility 1s categorically exempt under Class I (edst1n'1 facility) requlrOl,.nts of the Calitornia Bnvironaental Quality ~ct (CEQ~I. itItf-1leaODM.nOatioQ statt reCODA~nd8 that council: 1} R~confirb tho rent.!'lil ~ol\te policy and direct staff t.o l!Iaintain the lovel of rc.vonue necessary to cover the 11pass-thJ'ouqh" rent duo PAUSD. If opportunities arise to provido subsidies to tho arts 'co::'J;tlnlty other than thoso sp(lcifi~d in the lease ~Ate p13n~ while still e~lntAininq ths sane level of revenue with JAinor adjust.e.ents t.o tho rent",l plan structure, staff would return to Counci 1 for approval for any proposed adjustlaellts; 2) Waive Pol~cy .lIhd ProceduroD 1-11 pertaining to the Leased Use of City Lanctj.f"acilitios r fot" tho exiotinq sUbtenants at the Cubberlay site and authorize staff to renegotiate additional throe to five-year f,lubleaRos with these existing subtenants; and 3) ReconflT~ the exLstin9 rental rata structure for the slaven extendod day care providers. CHR,285:94 i; MARTHA E. HILLER Real Property Analyst J) .-----' ~ 0 . .A.A-~ LY . ISON ector 0 inance \', Attachments: Extended Day Care Subtonanta and Rental Ratos Related Staff Reports: CHR: 285: 94 CHR:445:91 CKR: 114:0 CKR: 490: 91 .\ ., ,. :",' .n ;j; ,J 993/114 EXTENDED DAY CARE SU9T£N/\NTS /\NO MONTHLY RENTS PAYABLE TO CITY RENT PAcce ADDISON $295.~1 eUVENEC $295.21 ELCARMElO S295.21 ESCONDIDO closed rO' 8!J!rH!"H~:" ~2SS,21 flAYS $295.21 HOOVER c;OSOCIIOf summer $295.21 OHlONE $295.21 PAlO VERDE $295.21 SUBTOTAL PACCC . _--------_ .. _._-- CHILORENS CREATIVE LEARNING NIXON REOWOOQ ENRICHMENT CENTER FAIRMEAOOW PAUSD JUANA BRtONES cl-osed lOf summ8( TOTAL MONTHLY RENTAL CUE CITVOF PALO ALTO $295.21 53,487.79 =~-=:::"-' rOTAL MONTHLY PAYM ENT FROM C lTV TO PAUSe SO. Ii,. 10~ " 900 • 900 • IOS0 • \1M • \1M • 960 x 960 • 960 • ATTACHMENT A TOTAL MO. RENT PER Unl!:n_E!. ___ ~_ SO.FT .n.tO//I}i. ___ ..•• SO.IO $108 $404.00 $0.37 ~.IO $96 $392.00 SO.41 M.l0 $96 S3n.00 $0.41 SO.10 $IOS $404.00 $037 SO.10 $96 $392.00 5D.41 $0.10 596 5392.00 $0.41 SO.IO $96 $392.00 $OAI 50.10 sse $392.00 $0.41 $3,160.00 I $2,36-1.00 (do"" oM & AVO . ___ ~Ivr_~~~~_~ . .!-:.'~ .. $1,414.00_ '";"' I/F' V'.